Aussies to up reporting requirements in market structure tweaks

The Australian regulator is continuing its market structure transformation,
proposing
new rules which could mean greater reporting requirements for participants.

Released this week, the new consultation paper from the Australian Securities & Investments Commission (ASIC) proposes new
rules for reporting suspicious market behaviour and increased restrictions on
how and when participants can trade in the dark.

Among a raft of changes, ASIC has amended its anomalous order threshold and
extreme cancellation range rules, as well as extending those rules to the ASX
SPI 200 index future.

On pre-trade transparency, ASIC has drafted a new rule on
price improvement and altered the block trade sizes, however, the regulator has
decided against proceeding with a new rule on a minimum size threshold for dark
orders.

“When ensuring markets are fair and efficient, it is
important to balance innovation and maintain integrity,” said ASIC deputy
chairman Belinda Gibson. “These proposals have come after lengthy consultation
with the industry, which began in November 2010, and achieve this desired outcome.”

In a release accompanying ‘CP 179 Australian market
structure: Draft market integrity rules and guidance’, ASIC confirmed previous decisions for a number of areas it would continue to consult with industry, “with a view to
publishing draft rules and guidance soon”.

In particular, on automated trading participant controls,
ASIC is proposing to make no new rule on algorithm testing and a new rule
requiring direct control over filters or the ability to disable order flow. But
it will amend existing rules to require annual review of systems and publish
guidance clarifying its expectations on trading system controls, testing of
systems and additional minimum standards for direct market access.

“Financial markets are the engine room for the growth of our
economy, and it is important that we are vigilant to maintain Australia's
leading reputation,” said Gibson.

Comments on the latest round of consultation close 6 August
2012. ASIC first consulted on equity market structure changes in November 2010
in preparation for the introduction of venue competition, which began with the
launch of Chi-X Australia in October.